85,320,000/((174,472,000+193,694,000)/2)= 46.35% 37,057,000/((110,903,000+112,180,000)/2)= 33.22% The above calculation shows that Microsoft uses the assets more efficiently than Oracle. Microsoft applies the assets to compensate for expenditures and in turn it generates more revenue. Return on Equity (ROE) Formula: ROE = Net Income / (Shareholder’s Equity (total Equity of Previous year + Current Year/2)) No. Microsoft Oracle 1. 3,122,000/(8,013,000+80,083,000)/2)= 7.08% 2,814,000/((4,305,000+48,663,000)/2))= 10.63% ROE calculation is also an indicator how management using equity to fund operations for the grow the company.
The flow should be absolutely smooth and uniform each year so that the current assets are sufficiently large than the current liability so that the firm is able to pay its current maturing debt when it becomes due. The trend of current ratio is represented in the chart above for a better understanding. In this chart a fluctuating trend can be noticed in case of IOCL. However, IOCL has a better ratio compared to its competitor apart from the year ending Mar' 09. Thus, IOCL has a better short term solvency position than HPCL even though it has not reached the ideal ratio i.e.
The rate of return on assets measures the use of corporate creditors and owners of total profits. The higher the index, the better use of corporate assets, indicating that enterprises succeed in income and savings .The use of funds achieved good results. As Sainsbury, its ROA in 2014 was 4.33%, down by 1.56% in 2016 slightly, but overall remained stable, which shows the capital flow quick speed , the small amount of funds occupied, the volume of business. Due to its stability, the risk of operation is low and the level is good. The return on equity shows the return on the capital provided by the shareholders after payment to other capital providers.
This which shows that Wal-Mart is more effective in utilizing their equity base, and it also indicates to investors that Wal-Mart is more efficient at applying their money. Wal-Mart has a 22.01% Return on Equity compared to Target’s Return on Equity at 18.51%. For Target this shows that they are receiving less on their return on their investment compared to Wal-Mart. As Target’s debt increases, their Return on Equity will increase as well as long as their Return on Assets are higher than the interest rate paid on the debt. References Investopedia.
A liquid business is considered financially sound since it is able to meet financial obligation as and when they fall due and avoid the risk of becoming insolvent. Current ratiois the ratio that comparing current assets with current liabilities and to indicate whether there are sufficient short-term assets to meet the short-term liabilities. The higher the ratio, the more liquid the company is. Formula: "Current Ratio"=(current assets)/(current liabilities) POWER ROOT BERHAD OLDTOWN BERHAD =RM228,327,538/RM78,521,080 =2.90∶1 =RM258,606,272/RM76,451,497 =3.38∶1 Acid test ratio, also known as quick ratio which is applied to determine the company’s liquidity level by using its most liquid current assets and current liabilities. The inventory is omitted from the calculation because inventory is not always a liquid assets for the company.
Compared to its industry average, Sun Life can be rated as more favorable. Sun life’s debt ratio of 90.35%9 is higher than its equity ratio this is considered risky because the huge percentage of its asset is supported by debt. However, Compared to its industry average of 93.2% it is still considered favorable. Sun life’s return on total assets is 0.798%10 this favorable compared to its industry average of
The comparison of banks based on Efficiency ratio is fast and feasible. The ratio is considered to be meaningful for investors. Comparisons of banks in different countries reveal significant differences in interest rates, commission fees and factor costs. As these elements are incorporated in the efficiency ratio calculation, banks situated in a country with comparatively high interest margins ceteris paribus appear to be more productive than others. The balance sheet policy of a bank affects the refinancing costs along the yield curve.
Reese and Weisbach, 2002; Benos and Weisbach, 2004; Doidge et al., 2004). Second, non-US firms must comply with SEC disclosure, helping to enhance the market transparency and hence lower the firm’s cost of capital (e.g. Verrecchia, 2001; Lambert et al., 2007). Last but not least, cross listing on the US exchanges increases investor awareness and expands the firm’s investor base (e.g. Merton, 1987; Foerster and Karolyi, 1999).
If in the occurrence that the debtor wouldn't be able to repay the loan and forfeited, the creditor will collect the pledged asset as payment for the debt. Usually, the collateral would make up ... ... middle of paper ... ...ing Rate of Return (ARR) 4.2 DCF Investment Appraisal DCF or discounted cash flow There are two choices which a business could choose from, net present value (NPV) and internal rate of return (IRR). Net present value Both of these methods are far more superior to traditional investment appraisal methods as mention previously. As comparison, NPV solves all three problems mentioned before in payback period. NPV takes into account of all timings of cash flows 5.0 Advanced Investment Appraisal As mention before, discounted cash flow is by far more superior from traditional investment appraisal methods.
The combination is better because the points on the straight line are further northwest than the portfolios from the previous paragraph. Of course the lower the level of risk aversion the further toward the tangent the investor?s optimal portfolio moves. In summary, investors on the whole are rational and contribute to an efficient market through prudent investment decisions. Each investor?s optimal portfolio will be different depending on the feasible set of portfolios available for investment as well as the indifference curve for that particular investor. Lastly, risk free borrowing and lending changes the efficient set and gives the investor more opportunities to either get a higher expected return with the same amount of risk or the same amount of return with less risk.